Research On Incentives To The County-student Financial Assistance Center Staff Based On Moral Hazard Prevention In The Student-origin Credit Loans

The Student-origin credit loans are the main type of Chinese national student loans, which are the loans that financial institution lends to students with financial difficulties as the tuition and the cost of living. The county-student financial assistance center is the the most basic operating agencies of national student financial assistance policy. Five years practice shows that student loans and other credit funding policy of central government guarantee the student family economic difficulties, and the smooth running of each policy has benefited from the county-student financial assistance center.Government intervention is a double-edged sword. As policy loans, the student-origin credit loans’ advantages are the government takes the credit risks, and then the financial institution has enthusiasm to take part in the policy. But in the management practice, more participants take part in the policy and form a kind of multiple principal-agent relationship because of the government regulation, in which, the county-student financial assistance center staff is the most important parts. Moral hazard derived from different targets, asymmetric information and opportunism of the participants lead to many policy uncertainties which produce some blocking effect to the policy. Because incentive and supervision mechanism design are the basic methods to solve moral hazard, the staff incentives are the key to the smooth running of national student financial assistance policy.Applying game theory and empirical research methods, the risk formation mechanisms and incentive defects and distorted were studied. The result shows that the government regulation not only corrects the student loans market failure effectively but also transfer the students’ moral hazard to staff moral hazard, and at the same time, the multiple participants’ moral hazard, the issues staff’s multi-tasks, multi-principals and multi-roles being caused by government regulation defects, result to the lack of incentives. So, the study focuses on the incentives to staff based on participants’ moral hazard prevention.Firstly, applying game theory, staff preventing student’s moral hazard by government intervention were discussed. The result shows that credit factors not only make the threat credible to the borrower, but also induce the borrower to tell the truth in signaling model. The power of the government must be used to prevent the risks because the system composed by lender and borrower can not do this by itself. Reducing the student’s moral hazard transferring to staff at the utmost by government intervention is the precondition of credit risk prevention of student loans.Secondly, applying principal-agent theory, incentive mechanisms were studied based on staff moral hazard prevention, multi-tasks and multi-principals. The research based on traditional principal-agent theory show different results: the current performance appraisal measures have no incentive function; the government should meet the institutions conditions meanwhile additionally paying in the condition of asymmetry information; differentiation incentive contracts should be designed according to the different loan environment considering the bank profit as the factor of principal-agent system; rank order tournaments can solve the incentive problems of agency facing to common uncertainty factors while the agent performance are relevant. Multi-tasks models show that independent incentive contract should be designed when the agent’s effort couldn’t be observed and the tasks are relevant, and positive incentive effect could be obtained when the effort and performance are all observed when the incentive condition obtained. Specialized division of labor can increase the Total certainty equivalence when the incentive contract is not being changed and the costs of the tasks are completely substituted each other. Defects of government regulation in national policy were pointed out, and suggestions about tasks regrouping and organization resetting were proposed. Common agency incentive models based on multi-principals show that exclusive dealing could lead the agency to pay more attention to the amount of the students who obtain the loans but ignore the task to urge them to return the loans, and result in hindering the policy implementation. The government should design the mechanism not only considering its own interests, but also the enthusiasm of banks to participate in national student financial assistance policy. The importance of urging the students to return the loans is emphasized based on mechanism designing, and the suggestion is proposed that enhance the incentive on urging the students to return the loans.Formal economy contracts were designed in the above chapters, in which both the targets of principal and agency are the same to the contracts. But to staff with multi-roles attribute, only the short-term, economic incentives are not effective, some of their self-evident ideas must be understood, such as desire of promotion, greater sense of accomplishment, thrill and satisfaction of working and realizing their own values. So in this thesis the staff incentives were researched applying psychological contract theory. Three-dimension structure implicit contact between government and staff is built which containing transactional dimension, relational dimension and developmental dimension. The work attitude influence on the staff’s psychological contract are discussed, which contains six factors such as job satisfaction, hard work, job-transfer tendency, job performance, Subjective well-being and organizational commitment. The analysis shows that job-transfer tendency is negative correlation to transactional and relational dimensions, and other five factors are positive correlation to three dimensions. The three-dimension structure has predictive effect on organizational commitment, and two dimensions are predictive to Subjective well-being, hard work, job satisfaction and job performance, but only relational dimension has predictive effect to job-transfer tendency. The proposal of applying government employee system to regulate the county-student financial assistance center is proposed, combining the studies on the incentive mechanisms based on principal-agent theory and psychological contract theory.In the end, the thesis summarizes the research, and puts forward some shortcoming of research and future research direction.